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Things to Consider Before Buying Property in Croatia

Croatia has long been the go-to destination for real estate investment, residential or otherwise, as the country’s nice preservation of treasured, historical and beautiful landscape and architecture- not to mention the excellent network- making the sector quite the hot cake. If you aim to get yourself a slice of the budding industry, here are a few important things to note.

1) What foreign nationals should know

There a number of rules and regulations in place which allow or prohibit the acquisition of new property by foreigners depending upon certain criteria. If the buyer is from an EU member state- of which Croatia is- then they are covered by the union’s umbrella and as such can purchase properties much like any ordinary Croatian citizen.

For that to be the case for non-EU foreigners, then their countries of origin must have an active reciprocity agreement in place with Croatia and their eligibility must be affirmed by the Ministry of foreign affairs. What’s more, it is not allowed for foreigners to purchase any property traversing lands falling under the jurisdiction of cultural monuments.

2) Timeline essentials

As mentioned before, foreign nationals must get the green light from the Ministry of Foreign Affairs which must be expressed in formal documentation otherwise no purchase can be completed.
You need to set aside a few months for this process to give the ministry enough time to check and verify various international laws and ensure that the requisite agreements, if required, are in place.

However, purchasing agricultural lands or real estate properties via a company ownership gets around this process thereby enabling foreigners to get acquisition without having to wait. The good thing about such companies is that they can be founded by citizens of any country and they’ll still have the same legal privileges as other legal Croatian entities.

3) How the purchase process works

The first step toward property acquisition is signing a pre-contract agreement establishing the conditions of the sale. At this phase, a preliminary check is carried out to confirm the property’s legal ownership and the buyer needs to pay one-tenth of the selling price. Afterwards, appropriate documents such as construction zone certification, seller’s proof of ownership, among other essential paperwork depending on the circumstances of the purchase are submitted to the Ministry of Foreign affairs.

The Land Registry will also be handed a copy of the contract which must be duly signed by a notary before submission while the Municipal Cadastral Department will be given a tax payment amounting to 4% of the transaction fee. Newly built properties are however exempted from paying the tax if the purchase is made directly from the investor for the first time.

Points to Keep in Mind

If a seller breaches the terms of the agreement during the pre-contract stage, then he/she is required by law to return the full sum paid to him/her as deposit to the buyer. Once the contract is in place, a penalty that could reach upto twice the deposit amount takes effect. Contract breaches by the buyer, on the other hand, instigates the risk of forfeiting the deposit and/or incurring additional expenses as deemed fit by the Croatian government.